This week our series of briefs on the new global economy looks at the international movement of people. Is migration increasing? What drives it, and how does it affect national economies?

FROM the beginning, migration has been one of the most conspicuous features of human history. Humanity did not appear simultaneously all over the earth but, according to the current scientific consensus, first evolved in Africa, and from there spread far and wide. Even after mankind had populated most of the planet, migration continued to play a decisive role in history down the centuries, as people contended for territory and the resources that go with it.

In many of history's biggest movements of people, the migrants were not volunteers. In the 17th and 18th centuries 15m people were taken as slaves from Africa and shipped to Brazil, the Caribbean and North America. In the 19th century, between 10m and 40m indentured workers (“coolies”, often no better than slaves) were sent in vast numbers around the world, mainly from China and India.

This century's wars in Europe and Asia displaced millions more. But perhaps the most intense episode of migration-under-duress in modern times occurred after the partition of India in 1947, when 7m Muslims fled India for the new state of Pakistan and 7m Hindus fled in the opposite direction.

As individuals, not merely as members of races or religions in flight, people have always travelled in search of a better life. Between the middle of the 19th century and the start of the second world war 60m people left Europe and moved overseas—to the United States (which received 40m of them), Canada, Latin America, Australia, New Zealand and South Africa. Much of this movement was guided by economic calculation. Most modern migration is of this kind, though nowadays the pull is high wages rather than cheap land.

For the past century or so, the pattern of migration has shifted a good deal, with changes in government policy playing a key role. Until 1914 governments imposed almost no controls. This allowed the enormous 19th-century movement of migrants from Europe to North America. The United States allowed the entry of anybody who was not a prostitute, a convict, a “lunatic”—or, after 1882, Chinese.

Travel within Europe was largely uncontrolled: no passports, no work-permits. Foreign-born criminals could expect to be deported, but that was the extent of immigration policy. The only questions were whether migrants could afford the journey and, having arrived, be better off than at home.

After 1945 came another great change. Many European countries faced labour shortages. Their immigration laws by and large were not repealed, but were enforced much more liberally. Governments actively recruited immigrants for jobs in their expanding industries. Migration surged again, now not mainly from Europe to North America but from the developing countries to the rich ones.

The next big change came in the 1970s. The rich countries were no longer growing quickly and struggling with labour shortages. Recession came to Europe and America, and immigration rules were tightened again. This more restrictive regime continues to apply.

Counting heads

It is difficult to say how much migration is going on. Official definitions of “migrant” vary, and migrants on any definition are difficult to count.

However, according to estimates in “The Work of Strangers”, a study by Peter Stalker published by the International Labour Organisation, roughly 80m people live today in countries they were not born in. Another 20m live in foreign lands as refugees from natural disasters or political oppression. Each year sees another 1 1/2m or so emigrate permanently, and perhaps another 1m seek temporary asylum abroad. By historical standards, these numbers are large in absolute terms, but small in relation to the now much larger populations of the receiving countries (see chart 1).

The United States remains much the world's biggest recipient. It gets about as many permanent immigrants as every other country in the world added together: 720,000 in 1995, down from a peak of nearly 2m in 1991. Germany, easily the main receiving country in Europe, had roughly 800,000 immigrants in both 1994 and 1995, but its definition of “immigrant” is much broader than America's and includes many temporary workers.

The underlying trend of economic migration reflects two countervailing forces. As the cost of travel drops and incomes rise in developing countries, migration becomes easier. On the other hand, in poor countries with fast-rising incomes the incentive to move shrinks. The net effect in the early years of industrialisation tends to be higher migration. Despite the tightening of rules in many rich countries during the 1970s, immigration did increase somewhat during the 1980s and early 1990s. New restrictions have slowed this expansion in the past few years (see chart 2).

Has there ever been a global market for labour? During the 19th century, arguably there was. Otherwise, the United States could not have expanded at anything like the rate it did. Nowadays, there is no real market, such is the severity of restrictions in force. The interplay of these rules and other factors gives rise to complicated migratory patterns. Each receiving country has its own sources: the links are often historical as well as economic or geographical. Earlier generations of migrants form networks that help new ones to overcome legal obstacles; and today's tighter rules tend to confine immigration to family members of earlier “primary” migrants.

Mexico is the main source of migrants to the United States, with about 90,000 permanent (legal) settlers in 1995. But the former Soviet Union and the Philippines, taken together, supplied even more during that year—55,000 and 51,000 respectively (see table).

Citizens of European Union countries are free to work anywhere within the EU. This is presumably promoting the flow of economic migrants within the EU, but it is difficult to be sure of the effect (see chart 3). The proportion of EU citizens in each member-country's foreign-born population varies widely—from 25% in the Netherlands to 89% in Luxembourg—and any tendency for this share to rise has lately been overshadowed by the influx of new immigrants from Central and Eastern Europe.

Another new trend is a worldwide shift towards migration of highly skilled workers. Again this reflects the interplay of economics and regulation. As multinational companies expand, they develop their own internal markets for skilled workers. The expansion of trade also creates opportunities for skilled migrants, both directly (in trade-related occupations) or indirectly (by changing attitudes towards “abroad”). Governments also prefer high-income arrivals, so immigration rules favour those with skills.

The growth of the multinational enterprise seems likely to spur the next big development in the history of migration. Big companies want the freedom to shift employees from country to country, and to use citizens of one country to alleviate skills shortages in another. This will be not so much a quantitative change (which governments would resist in any case) but a qualitative one—namely, greater migration of workers-plus-skills, or “human capital”. If a truly global market for labour ever reappears, it is likely to be for highly skilled workers only.

Migration may not be new, but it has become more controversial than for many years. On the face of it, immigration brings a variety of benefits to the receiving country. An important one for many rich countries is demographic. The average age of the advanced economies' populations is rising. Immigration tends to lower it, because most migrants are young. This improves the ratio of active workers to retired people, so taxes can be lower than otherwise.

Against this, a common view is that immigrants compete for jobs which would otherwise have gone to nationals, reducing wages and/or employment prospects for the indigenous workers. This sounds plausible—surely an increase in the supply of labour must reduce wages or increase unemployment? The truth is more complicated.

Jobs and wages

Immigrants are consumers as well as producers, so they create jobs as well as taking them. And the work they do need not be at the expense of native workers. Immigrants often hold jobs (as domestic servants, for instance) that natives are unwilling to accept at any feasible wage.

Also, immigrants sometimes help to keep industries viable that would otherwise disappear altogether, causing employment to fall. This was the conclusion, for instance, of a study of the Los Angeles garment industry in the 1970s and 1980s. And when immigrants working for low wages do put downward pressure on natives' wages, they may raise the (real) wages of natives in general by keeping prices lower than they otherwise would be.

In theory, then, the net effect of immigration on native wages is uncertain. Unfortunately, most of the empirical research on whether immigrants make natives worse off in practice is also inconclusive—except that the effect, one way or the other, seems small. Most of this research has been done in America: if there were any marked influence on wages, that is where you would expect to find it, given the scale of immigration and the tendency of the newcomers to concentrate in certain areas. But most studies have found that the impact, if any, is very slight.

Many studies have compared wages and employment in areas with many immigrants to wages and employment in areas with few. For instance, one examined the impact of the sudden and notorious inflow of refugees to Miami from the Cuban port of Mariel in 1980. Within the space of a few months, 125,000 people had arrived, increasing Miami's labour force by 7%. Yet the study concluded that wages and employment among the city's natives, including the unskilled, were virtually unaffected.

Another study examined the effect of immigration on wages and employment of those at the bottom of the jobs ladder—unskilled blacks and hispanics. It found that a doubling of the rate of immigration had no detectable effect on natives (although the wages of the previous group of immigrants, presumably those in closest competition with the newcomers, saw their relative wages fall by 2 1/2%).

The most recent work, admittedly, has tended to question these findings. This new strand of research is linked to recent work on the effects of trade on wages, and especially on wage inequality. Using more detailed statistics and more sophisticated methods than the earlier studies, this work has tended to find that immigrants' wages take longer to rise to the level of natives' wages than had been supposed. This implies a more persistent downward pressure on the host economy's labour market.

Typically these studies find that immigration does depress unskilled natives' wages—to a small extent. But even these new results (which are by no means unchallenged) need to be kept in perspective. Nearly all economists would agree that the effects of immigration are insignificant in relation to other influences.

In his 1997 book “Trade and Income Distribution”, William Cline reviews the literature on globalisation and wages. In general, Mr Cline's estimates tend to the pessimistic end of the range. Nonetheless he finds that of all the forces acting to lower unskilled wages relative to skilled, immigration is the weakest.

According to his estimates, immigration would by itself account for a fall of two percentage points in the ratio of unskilled to skilled wages in America between 1973 and 1993. Technological change, acting to reduce the demand for unskilled labour, and a category called “unidentified factors” pushing the same way would each account for a much greater fall of nearly 30 percentage points.

It seems safe to conclude, despite the uncertainties, that fears over the economic effects of immigration are much exaggerated.